Published: Fri, March 31, 2017
Markets | By Erika Turner

Oil rises on Libya disruption, likely OPEC output cut extension

Oil rises on Libya disruption, likely OPEC output cut extension

Oil prices rose on Tuesday after reports showed Libyan oil production was disrupted, tempering concerns about the global supply glut.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK7, -0.24% recently traded up 17 cents at $49.69 a barrel in the Globex electronic session.

Brent crude oil futures gained 0.58 dollar or 1.14 percent to close at USD 51.33 a barrel at NYMEX.

Singapore received 11,000 bpd of the USA crude oil; Peru, 7,000 bpd; France, 7,000 and Spain bought 4,000 bpd, the EIA data indicated. Trade press reports and tracking of ship movements indicate that US crude exports to Curacao are likely being blended with heavy Venezuelan crude oil, either for processing at the Isla refinery or for re-export to PDVSA customers. USA crude inventories surged to 8,67,000 barrels in the week ending on March 24.

According to the EIA, several factors appear to have contributed to the rise in the U.S. crude oil exports in 2016.

Oil prices extended gains on Wednesday despite an increase in USA crude inventories, lifted by Libyan supply disruptions and expectations of an OPEC-led output cut being extended.

Nigeria has lost some of its market share in Europe, its biggest regional market, as crude oil exports from the United States penetrate more destinations.

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JBC Energy said that given prices have been bobbing in a narrow range, the growth in USA oil-drilling activity seen so far this year may lose steam over the next few months.

Major oil traders gathered in Switzerland this week said they expected the output cuts to be extended, providing Russian Federation complies.

A Reuters survey showed OPEC oil output has fallen for a third straight month in March and members have now complied with 95 percent of their commitments under the deal.

"The one wild card in here is that if North American shale producers are the benefactor of OPEC cuts, it makes it much harder to swallow, where you have competitors benefitting at your cost - that's a big issue".

Iran has affirmed it will adhere to a production cap of 3.8 million barrels per day, which the Saudis took as an important statement of intent.

Russia has already cut oil production under a deal with OPEC by 200,000 barrels a day, Russian Energy Minister Alexander Novak told CNBC on Thursday, according to TASS.

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